Are you ready to cross the threshold into home ownership? Buying your first home is a major life decision, and one you shouldn’t enter into lightly. With such a huge investment on the line, it’s a must to understand the tax and financial considerations of purchasing a home before signing on the dotted line.
The first question to ask yourself is how much home can you afford. If you follow recommendations from the Federal Housing Administration, your monthly mortgage payment should not exceed 29% of your gross income. Lenders take a number of factors into account when determining your loan eligibility, including debt-to-income ratio, available cash, credit history, and more. Additionally, you’ll need enough cash to cover not only your down payment and closing costs, but also any moving and modification expenses.
It’s a good idea to take a hard look at your income before getting tied to a mortgage. Generally, if you have a solid record of paying bills, a two-to-three year employment history with a consistent source of income, and enough money to swing the down payment, you could be well on your way to living the American dream.
Once you’ve done the math and passed the adequate income test, you can go ahead and sit down with a lender to get pre-qualified for a mortgage. That will give you a clearer picture of what kind of loan you’re eligible for while showing potential sellers that you’re ready to move forward.
In the end, buying a home can be a great way to enjoy a sound financial investment now and for years to come. To learn more about the tax benefits of home ownership in Austin, get in touch with the team at Taxation Solutions, Inc. We’ll help you understand the tax benefits of owning your first home.